This Time is Different: Eight Centuries of Financial Folly. Reinhart & Rogoff (2009)
“One can only surmise that many governments do not want capital markets to fully recognize the risks they are running by piling on debt and debt guarantees due to their fear of having to pay much higher financing costs. Publishing historical data will make investors ask why current data cannot be made equally available. Still, one would think a strong case could be made for less profligate governments to open up their books more readily and be rewarded for doing so by lower interest rates. This transparency, in turn, would put pressure on weaker borrowers. Yet today even the United States runs an extraordinarily opaque accounting system, replete with potentially costly off-budget guarantees. In its response to the most recent financial crisis, the U.S. government (including the Federal Reserve Board) took huge off–balance sheet guarantees onto its books, arguably taking on liabilities that, from an actuarial perspective—as evaluated at the time of the bailout—were of the same order of magnitude as, say, expenditures on defense, if not greater. Why so many governments do not make it easier for standard databases to incorporate their debt histories is an important question for future academic and policy research.”
[op. cit., p. 138]
Reinhart & Rogoff’s text is an eye opener. That’s true that executive power is a practical way of making government (democratic or not) work. But how much information is withhold from the citizens?
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